QUESTION: How does one go about finding an aggressive, competent tax
preparer? I don't make a lot of money, but my taxes are becoming more
complex due to my being an independent contractor, and I feel that
it's beyond my skill level to continue doing my taxes myself.

REPLY: When you consider the number and magnitude of the new tax laws
that have been introduced in the past two years, your frustration with
not being to prepare your own return is understandable.

Your reference to an "aggressive" tax preparer brings to mind the
cliche about beauty being in the eye of the beholder. Some return
preparers rely only on the IRS instructions and don't make any effort
to read the law or to become familiar with the numerous court cases
the IRS has lost. The companies that prepare large numbers of tax
returns for lower income taxpayers and that guarantee the return to be
audit-proof would be in the same category. I would consider such
return preparers to be the least "aggressive".

At the other end of the scale are the return preparers who will invent
non-existent deductions, sometimes without the knowledge of the
taxpayer. Any preparer who guarantees a refund is virtually certain
to be near the high end of the aggressive scale. It's my opinion that
such preparers should be avoided like the plague. There is no way to
know if anyone has overpaid their taxes for the past year until after
all the facts are available and the return has been completed. To make
such a claim without any such information is the mark of a very
aggressive tax preparer.

In the middle of the aggressive scale are the return preparers who do
tax work all year long, who read the law and attend more than the
minimum number of tax seminars and conferences for professional tax
preparers. (Those who work for large firms usually aren't interested
in working for very small businesses.) Many of these preparers are
CPAs who work for firms with a small number of professionals. Others
are enrolled agents, some of who have a Masters Degree in tax law.
Most tax lawyers don't prepare tax returns, but a few are both lawyers
and CPAs and they still prepare some returns. These tax preparers are
able to provide clients with a high level of expertise and are
familiar with those areas of the law where the IRS policy is vague or
where their position is arguable inconsistent with the Internal
Revenue Code or some significatn court cases.

As for whether a tax preparer is "competant", that's a bit like asking
for a competant auto mechanic, or doctor or plumber or any other
service professional. While it is not any kind of guarantee, CPAs
and/or those with an advanced degree in tax law (MBA, etc.) are more
likely to be more competant than the preparers who don't have such
training. High on this list are those who are both lawyers and CPAs
but who choose to work as CPAs. Another very significant factor is
whether the tax preparer does this kind of work all year long or just
during the tax season. And, the number of years they have been doing
tax returns is a valuable indicator. Significant involvement in
professional associations, being a speaker at conferences or writing
articles about taxes for professional journals is another helpful
indicator. However, there is a rough correlation between the degree of
skill and training and the fees that are charged.

For a small business, a bookkeeping service that has been in business
for many years and that mostly has other small business clients may be
a good compromise between competance and higher fees. The best way to
locate such preparers is through various local networking groups of
other small business owners.

Vern Jacobs